A cost due to an increase in activity is called
A) an incentive loss.
B) a marginal cost.
C) a negative marginal benefit.
D) the total cost.
B
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At the beginning of a year, decision makers expect the general level of prices to increase at a 6 percent annual rate. The CPI increases from 150 to 154.5 during the year; this indicates that
a. decision makers underestimated the rate of inflation during the year. b. decision makers overestimated the rate of inflation during the year. c. decision makers accurately forecast the rate of inflation during the year. d. the rate of inflation during the year was 4.5 percent.
Use the following table to answer the next question. The money supply and investment are in billions.Money Supply (billions of dollars)Interest RateInvestment (billions of dollars)$507%$100606110705120804130903140Assume that the MPC is 0.9 and the reserve requirement is 0.2. If the Federal Reserve needs to increase aggregate demand by $100 billion at each price level to move the economy back to full employment and the current interest rate is 6%, then the Federal Reserve should ________ bonds on the open market equal to ________.
A. sell, $2 billion B. buy, $2 billion C. buy, $4 billion D. sell, $4 billion
Command systems in the Soviet Union and pre-reform China failed primarily because of:
A. the failure to accumulate and use capital. B. greater resource scarcity than in market systems. C. the failure to specialize in production. D. coordination and incentive problems.
If expectations are rational, inflation can be reduced without a period of high unemployment.
Answer the following statement true (T) or false (F)